Karl Rove on Whether Tea Party Candidates Will Save or Sink the GOP

The following is a rush transcript of the September 19, 2010, edition of "Fox News Sunday With Chris Wallace." This copy may not be in its final form and may be updated.

CHRIS WALLACE, ANCHOR: This is not the program we were planning to bring you. Christine O'Donnell, the surprise winner of the Republican Senate primary in Delaware, agreed to come here live in Washington today to take our questions.

However, late Friday night her campaign canceled, saying O'Donnell was exhausted and had to return to Delaware. Saturday morning O'Donnell called me and said this, "I got triple-booked. I had been invited to go to church and then a picnic. I have to keep my priorities to Delaware voters."

So we begin today with someone who has been critical of O'Donnell, master Republican strategist Karl Rove.

Karl, you've come under a lot of fire from conservatives this week for criticizing Christine O'Donnell. Let's watch.

(BEGIN VIDEO CLIP)

SENATORIAL CANDIDATE CHRISTINE O'DONNELL: Everything that he's saying is unfactual. And it's a shame because he is the same so- called political guru that predicted I wasn't going to win. And we won and we won big.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH: If he had just gotten this mad at Democrats during the Bush administration, why, who knows how things would be different today?

(END VIDEO CLIP)

WALLACE: Add to that everyone from Sarah Palin to Michelle Malkin, Karl, and the argument seems to be you're part of the Republican establishment and you feel threatened by the tea party.

KARL ROVE, REPUBLICAN STRATEGIST: Well, this is actually about what is a winning strategy. There are serious questions that have been raised about Miss O'Donnell's background, character, statements and previous actions.

You can either say, "We're going to ignore those questions and plan on people's dissatisfaction with Barack Obama and his policies, with all the spending, deficits and debt and the Obama health care plan, and just ignore the personal questions and count on people's animosity towards those -- towards those Obama actions in order to win the election."

Or you can take the perspective that I do, which is people are not going to hear these arguments about President Obama and his policies and what the Democrats are doing in Washington as long as these questions are out there.

And frankly, here's the data. If you take a look at primaries like those in Nevada, Kentucky, Colorado, Missouri, Florida, where a Republican, strong conservative, won the primary, they immediately jumped to the lead in the polls.

In Nevada, Sharron Angle went 11 points ahead of Harry Reid immediately after she won the primary.

So look, we all want to have a -- I want to have a Republican Senate. I assume all the rest of these people want to have a Republican Senate. The question is what's the best strategy to get there. And if you take the strategy, "I'm going to ignore these questions," fine. Go ahead and pursue that strategy.

I, frankly, think a winning strategy requires coming to grips with these questions and explaining them in the most sympathetic way possible so that people unblock their ears in Delaware and begin hearing the broader message.

WALLACE: Well, you talk about explaining them in the most sympathetic way possible. Now Christine O'Donnell has canceled on us and another Sunday show, her campaign citing exhaustion. She says it was overbooking.

And now, as you probably know, there's a tape floating around of her back in 1999 saying that she dabbled in witchcraft. I mean, that's not going to help either of those, is it?

ROVE: Well, look, if you say that things like not paying your federal income tax and getting slapped with a lien is unfactual, you're obviously taking the perspective of "I'm going to ignore these." And again, that's a legitimate campaign strategy. It depends upon getting a -- you know, depending on this wave of animosity towards President Obama in order to get elected.

I, frankly, think she made a smart decision by not getting on the Sunday shows this week. She shouldn't have accepted in the first place. But you know, she needs to talk to the people of Delaware. It's Delaware voters. It's not conservatives around the country who are going to determine her -- the outcome of this election. It's going to be Delaware voters who determine it. And there is, as I say, resistance.

When this woman wins a stunning upset -- and incidentally, I didn't predict she wouldn't win, but she won a stunning upset. And this is the moment when she should be grabbing the imagination of the people of Delaware and moving ahead in the polls like these other candidates did around the country.

I mean, Roy Blount has now got a 10-point lead building upon the momentum that he got from winning the Republican primary in Missouri.

In Ohio, Rob Portman now has a 20-point lead after trailing before the Republican primary his Democrat opponent.

WALLACE: I want to move on to other things, but I just want to ask you quickly, this new tape in which she said on the TV show "Politically Incorrect" in 1999 that she dabbled in witchcraft -- how damaging is that?

ROVE: Well, you know, in southern Delaware, where there are a lot of church-going people, they're probably going to want to know what was that all about. And again, she said it on television when she went on the -- on the Bill Maher show.

And I -- my view is she can't simply ignore it. She's got to deal with it and explain it and put it in its most sympathetic light and move on. But she can't simply say, "Oh, these are unfactual and not true and just ignore them for the -- go to my Web site and ignore them."

I don't think the people of Delaware have or are accepting that as a reasonable explanation. And until they do, they're going to be resistant to hearing the bigger, broader, more important message.

WALLACE: OK. I want to ask you about the other big political development this weekend, and that is the fact that in Alaska, Senator Lisa Murkowski, the incumbent Republican who lost to Joe Miller, who's going to be our next guest, the tea party favorite in the Republican primary, has now announced she's going to run as a write-in candidate.

Couple of questions. One, can she win? Or two, can she siphon enough votes away from Miller that the Democrat in the race, Scott McAdams, will win?

ROVE: Well, the answer to the first one is absolutely no, she can't win. Under the law, you have to carefully spell the name exactly correct. Everybody, go to your pencil and paper and write down the name "Murkowski" and see if you got it right. No, she's going to lose. Now, the bigger, more important question is is she going to keep a Republican from winning. Who would have thought that one of the most conservative states in the country ran the risk of having two liberal Democrats who follow the Obama line representing it in the United States Senate? And that's what she could do as a spoilsport.

This is sad and sorry. She should not be doing this. My hope is that the Republicans and conservatives in Alaska recognize the bigger issue, which is defeating President Obama's agenda and go for this highly qualified Republican nominee, a West Point graduate, a military veteran, a graduate of one of the nation's most prestigious law schools, a former magistrate judge, a practicing attorney in the state and an active Republican.

He won it fair and square, and Lisa Murkowski should not pursue this very, very sad line that she is pursuing.

WALLACE: Karl, let's step back and take a look at the bigger picture. In at least seven states that we count, the tea party insurgent beat the establishment Republican candidate in Senate contests. What's happening in the GOP? Is it a civil war? Is it a battle for the soul of the party? What's going on?

ROVE: Yeah. No, look. I'm not certain -- no, there's no civil war. And let's be careful about "tea party favorite." For example, everybody says Marco Rubio is the tea party favorite in Florida. I see him as a mainstream Republican.

It was the guy outside of the mainstream, Charlie Crist, who had endorsed President Obama's stimulus bill and who is now running as an independent and demonstrating his willingness to caucus with the Democrats in the Senate. He was out of the mainstream.

Take Kentucky. Rand Paul is a strong tea party favorite and a strong conservative. He was running against a former Democrat who was the secretary of state, converted into the Republican. And they had a strong difference in message. One man said, "I'm going to do something about deficits, debt, spending and health care." And the other guy said, "Elect me because I got a wonderful family and I deserve to have the nomination."

Message trumps resume every day of the week. Message with resume, like we have in Alaska, is a powerful combination.

WALLACE: One of the big issues in the campaign over the next 44 days is going to be the Bush tax cuts. And I want to ask you as a matter of pure politics how the Republicans should play it.

Should they continue with the argument, "We are going to oppose all tax cuts -- all tax increases, we're not -- we don't want any of the Bush tax cuts to lapse," or how do they respond when the Democrats and the president say, "Look, you Republicans are holding the middle- class tax cuts, which we can pass today, hostage because you want to look out for the rich fat cats?"

ROVE: Look, the -- Chris, this is a powerful argument for the Republicans. And I am mystified, as I said in my column on Thursday, why President Obama is raising this here at the last -- at the last of the campaign.

If you take a look at the latest Rasmussen, they say the Republican Party is trusted on the issue of taxes by a 52-36 percent margin. And why? Because the Republican line is very simple, "We should not be raising taxes when the economy is fragile. When we're in a recession, we shouldn't be raising taxes on anybody."

And guess what? We now have -- what is it? -- 32, 33 or 34 Democrats in the House who have signed a letter or made public statements saying exactly that, extend all the Bush tax cuts.

The president doesn't even have a bill. He certainly doesn't have a bill that he can pass through either house of the Congress, either the House or the Senate. And why he's bringing this up at the -- at the end of the campaign in a way that -- it's a losing issue, and he's not going to be able to deliver on anything, and he's going to look as a result -- add to the narrative of incompetence.

WALLACE: But...

ROVE: I just don't get it. It is not a smart move on the White House's part.

WALLACE: But, Karl -- and I don't have a whiteboard that I can put here. You've beaten me in that arms race. All the polls I look at indicate that when people are asked -- are you going for another whiteboard there?

ROVE: I'm going -- I'm going for the whiteboard, man.

WALLACE: OK, here you go.

ROVE: I know what you're going to ask.

WALLACE: Well, no, but the question is all the polls I that look at indicate that when people are asked, "Do you want to see the tax cuts for the wealthy extended," people, by, you know, a majority, oppose that prospect. So in that sense...

ROVE: No, that's not accurate. That's not accurate.

WALLACE: Oh, my God, here he goes again.

ROVE: Take a look at this. These are, again -- they -- there -- these are Rasmussen numbers. Do you want to end the Bush tax cuts or extend all the Bush tax cuts? Extend, 56. End all of them, 41.

If a more nuanced view -- do you want to extend the Bush tax cuts -- all of the Bush tax cuts? Fifty-one. Or extend only those that aren't for the wealthy? Forty-four. It's still a winner even if you put it in the way -- in the way that the Democrats are, which is, "We only want to extend them for the people making less than $250,000 a year." But again, that's a losing argument because that's one way to word it. The other way to word it is, "Do you believe that we ought to be raising taxes in a recession or when the economy is fragile?" And that is a huge winner for the Republicans. And as I say, it's driven over 30 Democrats in the House to sign a letter or make a public statement saying, "We are in favor of continuing all the Bush tax cuts."

WALLACE: OK. We've got a couple of minutes left. I want to get into another issue with you. When you look at the upheaval that we're seeing in the Republican Party this year, what impact does that have looking forward to the presidential race, which is going to start on November 3rd of this year, the day after the election?

Does it shake it up? Does it help a candidate like Sarah Palin, who's been so successful with her endorsements this year? And what does it mean for more of an establishment candidate like Mitt Romney?

ROVE: Yeah. Look, the presidential campaign is going to be several geological ages away. And we do have the tea party movement active this year. It is fresh. It's new. It's a little unsophisticated at times, a little insistent, a little demanding.

But again, I repeat, I think if you look at each one of these individual races, it was either a question of somebody who was more in keeping with the mainstream of the Republican Party versus somebody who was not, or somebody who had a message versus somebody who didn't.

Take Alaska, for example. Lisa Murkowski talked about how she was so successful in bringing home pork to the state of Alaska. And Joe Miller said, "Our country is in such bad straits that we've got to take -- you know, we've got to take our lumps along with everybody else, and we should not..."

WALLACE: But -- but you're...

ROVE: "... be so focused..."

WALLACE: ... kind of ducking my question.

ROVE: "... on bringing home the pork."

WALLACE: What does -- does this mean somebody like Sarah Palin moves up and perhaps is now the frontrunner for the Republican nomination?

ROVE: Oh, I -- look, I think the vice presidential nominee of the party in 2008, if she runs in 2012, is a -- is a -- you know, one of the frontrunners. I don't know if she's the frontrunner.

And again, I repeat. Look, there are several geological ages to come and go before that race shapes up. Who at this point in 2006 was saying, "Oh, Barack Obama's going to be the nominee of the Democratic Party in 2008?" I mean people are narrowly focused on 2010.

Look, if Sarah Palin wants to demonstrate her power and influence, she ought to -- where we started was Delaware. She ought to go to Delaware and campaign for her favorite Christine O'Donnell. She's tweeted on her behalf and she's mentioned her in a speech in Des Moines, Iowa.

If she wants to demonstrate her political power, go to Delaware and take this candidate whom she's backing and get her across the finish line by campaigning with her in Delaware. Sarah Palin has enormous magnetism and a big following. And let her employ it in the field on behalf -- in the front lines on behalf of the candidate that she cares so much about.

WALLACE: All right. We're going to have to leave it there. Karl, thank you so much for coming in today. We've promised we'll have you back as we get closer...

ROVE: You bet.

WALLACE: ... to the election. And I promise I will never interview you again without my own whiteboard. We're not going to have this unilateral disarmament ever again.

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